Safaricom pays out first special dividend in year of record profit-making


(Left-Right) Safaricom Chief Financial Officer, Sateesh Kamath, Safaricom Chief Executive Officer, Bob Collymore and Safaricom ...
(Left-Right) Safaricom Chief Financial Officer, Sateesh Kamath, Safaricom Chief Executive Officer, Bob Collymore and Safaricom Board Chairman, Nicholas Nga’nga after the announcement of the company's full year financial results at the Michael Joseph Centre.

In Summary

  • Having posted a 14.4 percent increase in net profit for the period ending March 31st 2019 to Ksh.63.4 billion, the firm’s board has recommended a 67 cents special dividend payout for the record-breaking performance in addition to a Ksh.1.25 traditional DPS settlement.
  • Vodafone Kenya Limited and the government of Kenya- the pair who make up Safaricom’s top shareholders at a 39.9 and 35% shareholding respectively are expected to be the largest beneficiary of the improved payout, receiving the lion’s share of dividends.
  • M-Pesa, the telcos mobile money service counties to hold great value for the firm having grown by 19.2 percent on an annual basis to post up revenues of Ksh.75 billion in the firm’s just concluded financial year.

Kenya’s largest telco-operator by size Safaricom will pay out a special dividend to shareholders following its record year of profit making in what is a first for the company.

Having posted a 14.4 percent increase in net profit for the period ending March 31, 2019 to Ksh.63.4 billion, the firm’s board recommended a 67 cents special dividend payout for the record-breaking performance in addition to a Ksh.1.25 traditional dividend per share (DPS) settlement.

Both the telco’s DPS and earnings per share (EPS) were record highs bringing the total payout to ordinary shareholders to Ksh.1.87.

Each of the firm’s shareholders is then expected to receive a share of the Ksh.50 billion general dividend and a further slice of Ksh.24.8 billion represented in the special dividend payout.

Vodafone Kenya Limited and the government of Kenya — the pair who make up Safaricom’s top shareholders at a 39.9 and 35% shareholding respectively — are expected to be the largest beneficiary of the improved payout, receiving the lion’s share of dividends.

The firm’s minority shareholders who control a 20 percent stake in the firm’s listed 40 billion shares at the Nairobi Securities Exchange (NSE) will too have a reason to smile from the increased payout.

Safaricom has consistently paid out an increased dividend to shareholders since going public in early 2008, a payout which has risen to the shilling mark over the last couple of years from a low 30 cents average in the late 2000’s.

The firm has likewise continued to deliver value to its shareholders reflected in its stock price of Ksh.29.25 at the close of trading Friday, a significant surge from the Ksh.3.50 offering during the company’s initial public offering (IPO).

M-Pesa, the telcos mobile money service, continues to hold great value for the firm having grown by 19.2 percent on an annual basis to post up revenues of Ksh.75 billion in the firm’s just-concluded financial year.

Money transfer services including PayPal carry the largest contribution to the funds transfer service followed closely by savings and lending, a portfolio represented by products such as Fuliza which advanced a total of Ksh.45 billion to customers in its first 3 months of existence.

While data revenue growth during the year slid to a low 6.4 percent annual expansion rate, the service too remains pivotal in expanding on the telcos growth with Safaricom already laying down plans to double its 4G network capacity by the end of the year.

“Customers want to ensure that they have a good network experience and an assurance to connectivity no matter where they are in Kenya. That’s why there must me an imperative on increasing the size of our network,” said Safaricom’s Chief Customer Officer Sylvia Mulinge.

As the voice and messaging, the traditional sphere for telco operators continues to shrink year on year, posting growth in the single digits, innovation remains pivotal to the longevity of the operators’ business and in-turn, profitability.

Safaricom’s Chief Executive Officer Bob Collymore equates play out to the need for the surprise factor in maintaining social relationships while highlighting on the telco’s position on the driving seat.

“Getting there isn’t nearly as difficult as staying in it. First, you have to capture the right kind of affection and then you have to persuade the subject of affection that they made the right decision. This becomes the difficult part as once the person accepts your advances, you then have to constantly find ways to keep them interested. I would say this is where we are as a company at this moment,” he said.

Despite losing on its market hold under subsequent quarterly reviews of the sector, Safaricom remains on the throne of ICT closing December 2018 with a total of 26.7 million subscribers which translates to a 63.3 percent market share.

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Story By Kepha Muiruri
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